Queensland bans IBM from future work

The Australian State of Queensland has barred IBM from future government work, “until it improves its governance and contracting practices.”

Queensland is grumpy with IBM because of its role in a billion-dollar blowout of a payroll system for its health department.

An inquiry into IBM's role in the project yesterday concluded Big Blue staffers did not follow its ethical guidelines in bidding for the work. The report also found Queensland's government didn't help matters by offering a poor brief, poor governance and being a weak negotiator.

The State's Premier (a title equivalent to a US State's Governor) Campbell Newman today issued a statement in which he said “it appears that IBM took the state of Queensland for a ride.”

Premier Newman also called on IBM to “deal with employees adversely named in the report.”

IBM, for its part, sent The Reg the following statement:

"IBM cooperated fully with the Commission of Inquiry into Queensland Health Payroll, and while we will not discuss specifics of the report we do not accept many of these findings as they are contrary to the weight of evidence presented.

As the prime contractor on a complex project IBM must accept some responsibility for the issues experienced when the system went live in 2010. However, as acknowledged by the Commission's report, the successful delivery of the project was rendered near impossible by the State failing to properly articulate its requirements or commit to a fixed scope.

“IBM operated in a complex governance structure to deliver a technically sound system. When the system went live it was hindered primarily through business process and data migration issues outside of IBM's contractual, and practical, control.”

“Reports that suggest that IBM is accountable for the $1.2 billion costs to remedy the Queensland Health payroll system are completely incorrect. IBM's fees of $25.7 million accounted for less than 2 percent of the total amount. The balance of costs is made up of work streams which were never part of IBM's scope."

Asked if Big Blue has any comment on the Premier's ban, an IBM spokes-entity said the company is “sticking with that statement” for the time being.

Just what IBM has to do to get back in Queensland's good books has not been spelled out. Nor has the government's plans for reforming its own procurement practices, which Newman said will emerge “at the next session of parliament”.

Not being considered for public sector work in Queensand is bad news for Big Blue, as the State grows quickly thanks to an attractive climate, enviable lifestyle and low taxes. While the government recently implemented austerity measures, missing out a chance to help meet the State's IT needs will hurt. There's also the wider stain to consider: bureaucrats around Australia now know they probably can be fired for buying IBM. ®